September 5, 2012

Matrix Service Company Announces Results for the Fourth Quarter and Fiscal Year Ended June 30, 2012 and Fiscal 2013 Guidance

Highlights:

  • Record backlog of $497.5 million with bookings of $227.4 million in the fourth quarter
  • Revenues increased 13.0% in the fourth quarter and 17.8% in fiscal 2012
  • Incurred an income tax charge of $3.1 million, or $0.12 per fully diluted share
  • Fiscal 2012 EPS of $0.65 per fully diluted share inclusive of the above noted income tax charge and strategic investment costs of $0.07 per fully diluted share
  • Outlook for fiscal 2013 in line with strategic plan revenue growth of 12% to 15%

TULSA, Okla., Sept. 5, 2012 (GLOBE NEWSWIRE) -- Matrix Service Company (Nasdaq:MTRX) today reported its financial results for the fourth quarter and fiscal year ended June 30, 2012.

Overview

Results for the three and twelve months ended June 30, 2012 continue to show strong revenue growth with significant increases in the Storage Solutions and Oil Gas & Chemical segments. The pace of bookings remains strong in all segments with backlog growing to a record $497.5 million as of June 30, 2012, marking six consecutive quarters of growth. Bid flow remains strong with over $831.4 million of new work booked in fiscal 2012.

John R. Hewitt, President and CEO of Matrix Service Company, said: "The solid revenue and backlog growth in the quarter and fiscal year is the result of our outstanding people and commitment to providing quality services to our customers. We continue to execute our strategic plan, including our new brand rollout last month."

Fourth Quarter of Fiscal 2012 Results

Revenues for the fourth quarter ended June 30, 2012 were $184.9 million compared to $163.6 million in the same period a year earlier, an increase of $21.3 million, or 13.0%. Net income for the fourth quarter of fiscal 2012 was $1.8 million, or $0.07 per fully diluted share. Fourth quarter earnings included an income tax charge of $3.1 million, or $0.12 per fully diluted share. The income tax charge represents adjustments of $2.1 million for prior fiscal years and $1.0 million in fiscal 2012, of which $0.2 million related to fourth quarter activity. Fourth quarter earnings were also reduced by $0.03 per fully diluted share for activity related to our strategic investments, primarily due to our investments in the mining and minerals business, industrial cleaning, corporate development, and the branding initiative. In the same period a year earlier the Company earned $5.7 million or $0.21 per fully diluted share.

Consolidated gross profit was $18.7 million in the fourth quarter of fiscal 2012 compared to $20.9 million in the same period a year earlier. The decrease in gross profit was due to lower gross margins, which decreased from 12.8% in the fourth quarter of fiscal 2011 to 10.1% in the fourth quarter of fiscal 2012 largely offset by the impact of higher revenues. The decrease in margins was primarily due to geographic expansion in the Storage Solutions segment, strategic start-up costs, and a lower volume of work in the Industrial segment.  The revenue increase is due to continued growth in the Storage Solutions business in Canada, and higher revenues in the Oil Gas & Chemical and Electrical Infrastructure segments, partially offset by lower Industrial revenue, which decreased due to project timing. Selling, general and administrative expenses were $12.2 million, or 6.6% of revenue, in the fourth quarter of fiscal 2012 compared to $11.4 million, or 6.9% of revenue, in the same period a year earlier. 

Fiscal 2012 Results

Fiscal year 2012 revenues were $739.0 million compared to $627.1 million in fiscal 2011, an increase of $111.9 million, or 17.8%.  Net income for fiscal 2012 was $17.2 million, or $0.65 per fully diluted share. Fiscal 2012 earnings included an income tax charge of $3.1 million, or $0.12 per fully diluted share. Fiscal 2012 earnings were also reduced by $0.07 per fully diluted share for activity related to our strategic investments, primarily due to our investments in the mining and minerals business, industrial cleaning, corporate development and the branding initiative. Net income for fiscal 2011 was $19.0 million, or $0.71 per fully diluted share.

Consolidated gross profit was $79.6 million in fiscal 2012 compared to $74.9 million in the same period a year earlier. The increase in gross profit was due to the impact of higher revenues partially offset by the effect of lower gross margins, which decreased from 11.9% in fiscal 2011 to 10.8% in fiscal 2012. The revenue increase is due to higher revenues in Oil Gas & Chemical resulting from turnaround and capital construction work and higher Storage Solutions revenues, which increased due to more work across most of the business. These increases were partially offset by lower Electrical Infrastructure and Industrial revenues. Selling, general and administrative expenses were $48.0 million, or 6.5% of revenues, in fiscal 2012 compared to $44.0 million, or 7.0% of revenue, in the same period a year earlier. 

Backlog

Backlog at June 30, 2012 totaled $497.5 million, an increase of $42.5 million, or 9.3%, compared to the backlog at March 31, 2012, and an increase of $92.3 million, or 22.8%, compared to backlog at June 30, 2011.

Financial Position

At June 30, 2012, Matrix Service's cash balance was $39.7 million. The cash balance along with the availability under the senior credit facility gives the Company liquidity of $146.5 million. 

Earnings Guidance

The Company expects that fiscal 2013 revenues will be between $800 million and $850 million and earnings to be between $0.83 and $0.98 per fully diluted share.

Conference Call Details

In conjunction with the earnings release, Matrix Service will host a conference call with John R. Hewitt, President and CEO, and Kevin S. Cavanah, Vice President and CFO. The call will take place at 11:00 a.m. (Eastern) / 10:00 a.m. (Central) on Thursday, September 6, 2012 and will be simultaneously broadcast live over the Internet which can be accessed at the Company's website at www.matrixservicecompany.com on the Investors' page under Conference Calls/Events. Please allow extra time prior to the call to visit the site and download the streaming media software required to listen to the Internet broadcast. The conference call will be recorded and will be available for replay within one hour of completion of the live call and can be accessed following the same link as the live call.

About Matrix Service Company

Matrix Service Company provides engineering, fabrication, construction and repair and maintenance services to the Electrical Infrastructure, Oil Gas & Chemical, Storage Solutions and Industrial markets.

The Company is headquartered in Tulsa, Oklahoma, with regional operating facilities throughout the United States and Canada.

The Matrix Service Company logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=13990

This release contains forward-looking statements that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are generally accompanied by words such as "anticipate," "continues," "expect," "forecast," "outlook," "believe," "estimate," "should" and "will" and words of similar effect that convey future meaning, concerning the Company's operations, economic performance and management's best judgment as to what may occur in the future.   Future events involve risks and uncertainties that may cause actual results to differ materially from those we currently anticipate. The actual results for the current and future periods and other corporate developments will depend upon a number of economic, competitive and other influences, including those factors discussed in the "Risk Factors" and "Forward Looking Statements" sections and elsewhere in the Company's reports and filings made from time to time with the Securities and Exchange Commission. Many of these risks and uncertainties are beyond the control of the Company, and any one of which, or a combination of which, could materially and adversely affect the results of the Company's operations and its financial condition. We undertake no obligation to update information contained in this release.

Matrix Service Company
Consolidated Statements of Income
(In thousands, except per share data)
         
 Three Months EndedTwelve Months Ended
 June 30,
2012
June 30,
2011
June 30,
2012
June 30,
2011
         
Revenues $184,862 $163,629 $739,046 $627,052
Cost of revenues 166,206 142,755 659,428 552,138
         
Gross profit 18,656 20,874 79,618 74,914
Selling, general and administrative expenses 12,246 11,359 47,983 44,014
         
Operating income 6,410 9,515 31,635 30,900
         
Other income (expense):        
Interest expense  (197)  (201)  (814)  (795)
Interest income 8 6 26 71
Other 73  (155)  (357) 440
         
Income before income tax expense 6,294 9,165 30,490 30,616
Provision for federal, state and foreign income taxes 4,508 3,482 13,302 11,634
         
Net income $1,786 $5,683 $17,188 $18,982
         
Basic earnings per common share $0.07 $0.21 $0.66 $0.72
         
Diluted earnings per common share $0.07 $0.21 $0.65 $0.71
         
Weighted average common shares outstanding:        
Basic 25,738 26,457 25,921 26,406
Diluted 26,122 26,797 26,298 26,686
 
 
Matrix Service Company
Consolidated Balance Sheets
(In thousands)
     
 June 30,
2012
June 30,
2011
     
Assets    
Current assets:    
Cash and cash equivalents $39,726 $59,357
Accounts receivable, less allowances (2012 - $1,201; 2011 - $1,428)  108,034  103,483
Costs and estimated earnings in excess of billings on uncompleted contracts  68,562  40,056
Inventories  2,482  2,249
Income tax receivable  --   399
Deferred income taxes  6,024  5,607
Other current assets  5,688  4,399
Total current assets  230,516  215,550
     
Property, plant and equipment, at cost:    
Land and buildings  28,846  28,287
Construction equipment  59,176  55,272
Transportation equipment  25,865  21,690
Furniture and fixtures  16,892  15,442
Construction in progress  2,910  2,465
   133,689  123,156
Accumulated depreciation  (78,814)  (69,845)
   54,875  53,311
     
Goodwill  28,675  29,058
Other intangible assets  6,504  6,953
Other assets  2,565  1,564
Total assets $323,135 $306,436
     
     
Matrix Service Company
Consolidated Balance Sheets (continued)
(In thousands, except share data)
     
 June 30,
2012
June 30,
2011
     
Liabilities and stockholders' equity    
Current liabilities:    
Accounts payable $48,931 $36,377
Billings on uncompleted contracts in excess of costs and estimated earnings  30,293  35,485
Accrued wages and benefits  15,298  18,099
Accrued insurance  6,912  7,514
Income taxes payable  1,115  -- 
Acquisition payable  400  -- 
Other accrued expenses  3,014  2,701
Total current liabilities  105,963  100,176
     
Deferred income taxes  6,075  5,789
Acquisition payable  --   800
     
Commitments and contingencies    
     
Stockholders' equity:    
Common stock -- $.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of June 30, 2012 and June 30, 2011  279  279
Additional paid-in capital  116,693  113,686
Retained earnings  117,419  100,231
Accumulated other comprehensive income  771  1,436
   235,162  215,632
     
Less treasury stock, at cost — 2,141,990 and 1,417,539 shares as of June 30, 2012 and June 30, 2011  (24,065)  (15,961)
     
Total stockholders' equity  211,097  199,671
     
Total liabilities and stockholders' equity $323,135 $306,436
 
 
Results of Operations
(In thousands)
      
 Electrical
Infrastructure
Oil Gas &
Chemical
Storage
Solutions

Industrial

Total
           
Three Months Ended June 30, 2012          
Gross revenues $ 31,825 $  54,713 $ 96,530 $   2,220 $ 185,288
Less: inter-segment revenues --  -- 426 -- 426
Consolidated revenues 31,825 54,713 96,104 2,220 184,862
Gross profit (loss) 4,092 5,772 9,316 (524) 18,656
Operating income (loss) 1,850 2,390 2,973 (803) 6,410
           
Three Months Ended June 30, 2011          
Gross revenues $ 24,907 $ 47,567 $ 83,840 $ 7,869 $    164,183
Less: inter-segment revenues -- 23 531 -- 554
Consolidated revenues 24,907 47,544 83,309 7,869 163,629
Gross profit 3,333 4,538 11,577 1,426 20,874
Operating income 1,310 1,611 5,733 861 9,515
           
Twelve Months Ended June 30, 2012          
Gross revenues $ 135,086 $ 206,031 $ 380,488 $ 19,983 $ 741,588
Less: inter-segment revenues --  208 2,334 --  2,542
Consolidated revenues 135,086  205,823  378,154 19,983  739,046
Gross profit 16,676  20,070 42,393 479  79,618
Operating income 7,609  8,134 17,493  (1,601)  31,635
           
Twelve Months Ended June 30, 2011          
Gross revenues $ 151,065 $ 143,753 $  299,762 $ 33,934 $   628,514
Less: inter-segment revenues 7 399  1,056 --  1,462
Consolidated revenues 151,058 143,354  298,706 33,934  627,052
Gross profit 18,337 13,647 38,779 4,151 74,914
Operating income 9,111 3,105 16,612 2,072 30,900

Backlog

We define backlog as the total dollar amount of revenues that we expect to recognize as a result of performing work that has been awarded to us through a signed contract, notice to proceed or other type of assurance that we consider firm. The following arrangements are considered firm:

  • fixed-price awards;
  • minimum customer commitments on cost plus arrangements; and
  • certain time and material arrangements in which the estimated value is firm or can be estimated with a reasonable amount of certainty in both timing and amounts.

For long-term maintenance contracts we include only the amounts that we expect to recognize into revenue over the next 12 months. For all other arrangements, we calculate backlog as the estimated contract amount less revenues recognized as of the reporting date.

The following table provides a summary of changes in our backlog in the fourth quarter of fiscal 2012:

 Electrical
Infrastructure
Oil Gas &
Chemical
Storage
Solutions

Industrial

Total
  (In thousands)
Backlog as of March 31, 2012 $110,575 $74,574 $252,967 $16,816 $454,932
Net awards 48,949 98,001 79,708 724 227,382
Revenue recognized  (31,825)  (54,713)  (96,104)  (2,220)  (184,862)
Backlog as of June 30, 2012 $127,699 $117,862 $236,571 $15,320 $497,452

The following table provides a summary of changes in our backlog for fiscal 2012:

 Electrical
Infrastructure
Oil Gas &
Chemical
Storage
Solutions

Industrial

Total
  (In thousands)
Backlog as of June 30, 2011 $85,551 $92,162 $218,073 $9,332 $405,118
Net awards 177,234 231,523 396,652 25,971 831,380
Revenue recognized  (135,086)  (205,823)  (378,154)  (19,983)  (739,046)
Backlog as of June 30, 2012 $127,699 $117,862 $236,571 $15,320 $497,452
CONTACT: Matrix Service Company

         Kevin S. Cavanah

         Vice President and CFO

         T: 918-838-8822

         Email:kcavanah@matrixservicecompany.com


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